13 Dec 11 Increasing Mortgage Fees to Fund the Payroll Tax Cut
Wow, it seems politicians will go to great lengths for Obama’s reelection campaign as they are now moving to fund the payroll tax cuts by taxing future government mortgages. It’s hard to believe that with the social security well running dry that we would slash the payroll taxes that actually fund it, but then to hear that they are going to use mortgages bought by Fannie Mae and Freddie Mac to fund it is even more absurd.
Democrats and Republicans continue to wrangle over how to pay for extending the payroll tax cut, one option floated by both parties on Capitol Hill is to tap into mortgage giants Fannie Mae and Freddie Mac to raise $38 billion in revenue over 10 years. But the proposal, which would require that the two Government Sponsored Enterprises (GSEs) undergirding the housing market raise the fees they collect from lenders, has real estate industry groups in an uproar. And housing experts say the additional fees could be yet another headwind for the shaky housing market.
The idea of boosting the fees Fannie Mae and Freddie Mac collect was first floated by the now defunct congressional Super Committee tasked with finding $1.2 trillion in deficit-reduction measures, and it had garnered bipartisan support at the time. Now, as Congress looks for ways to pay for an extension of the payroll tax cut, the proposal has resurfaced in legislation put forth by both House Republicans and Senate Democrats. If Congress doesn’t act the payroll tax cut is scheduled to increase by two %age points, to 6.2% from a rate of 4.2% – which would effectively increase taxes by $1,000 for the average family next year.
Fannie Mae and Freddie Mac don’t issue mortgages themselves, but they buy them from lenders and repackage them into securities that are then sold to a wide range of investors. The two GSEs now own or guarantee about half of U.S. home mortgages, or nearly 31 million loans. To protect against any defaults, they charge the originating lenders “guarantee” fees. Last year, those fees averaged 0.26 percentage points of a loan’s value. Under the new Republican and Democratic proposals, the fees would rise by at least an eighth of a %age point – and the money raised would go to the Treasury Department, not to Fannie and Freddie.
Business groups are opposed both to the higher fees and to the idea of diverting the money to the Treasury. The National Association of Realtors and the National Home Builders Association on Thursday sent a letter to Sen. Bob Casey, D-Penn., author of the Democratic proposal, arguing that the fees “should not be diverted for purposes unrelated to the safety and soundness of the housing finance system.” The groups said the congressional proposal is “counterproductive” and said the fees should be used “solely for the purpose of minimizing the loss exposure of these government-sponsored enterprises, investors and taxpayers.” The National Association of Realtors will send another letter to the House GOP leadership on Friday stating its fierce opposition to using revenue from a fee increase to fund programs outside of housing.
Some in Congress are also adamantly opposed to the higher fees. “Fannie Mae and Freddie Mac are currently being propped up by taxpayer dollars, so it makes no sense to use them as an ATM to pay for other government spending,” says Rep. Dennis Cardoza, D-California. “Although I support extending the payroll tax cut, it is imperative we find another source of funding instead of playing these shell games. Fannie and Freddie are already floundering under the weight of the ongoing housing crisis and I fear this could only further worsen their ability to help struggling homeowners.” California lenders continue to express concerns over increased mortgage insurance premiums so this could really burden borrowers in the Golden state.
The Government Sponsored Enterprises are still burdened with financial problems of their own. Since the Bush administration seized control of the mortgage giants in September 2008, they have received $151 billion in taxpayer funding – money that they must still repay. Having the guarantee fee go to the Treasury instead of Fannie and Freddie would only make it harder for them to pay down their debts, says Susan Wachter, professor of financial management at the University of Pennsylvania’s Wharton School. “If it is raised and goes to pay for Treasury deficits, it’s not covering the deficit that Fannie and Freddie owe, which ultimately is a tax payer liability as well,” she says. “It’s not accomplishing what it’s supposed to accomplish.”
Read the original Fiscal Times Articles on Paying for the Payroll Tax Cut.
10 Nov 11 Freddie Mac Indicates Mortgage Rates Falling Further
It looks like another wave of home refinancing is arriving as mortgage interest rates are breaking records once again. Lenders Nationwide and Quicken Loans reported a surge in mortgage applications this week. Freddie Mac announced today that fixed thirty-year mortgage rates had fallen to 3.99%, down from 4% last week. According to the Mortgage Bankers Association five weeks ago, the rates fell to a record low of 3.94%. The average interest rate on the fifteen-year fixed mortgage dipped last week to 3.30% from 3.31%. The best lender rates were released in a report by HSH earlier this week.
Home mortgage interest rates track the yield on 10-year Treasury note, which fell this week as investors shifted money into safer Treasury’s amid fears Europe’s debt crisis could worsen. Low mortgage rates have down little to boost home sales. Rates have been below 5% for all but two weeks this year. Yet home sales are on pace to be the lowest in 14 years.
The low interest rates have caused a modest boom in home mortgage refinancing, but that benefit might be wearing off. Most people who can afford to refinance have already locked in rates below 5 %. Just five years ago they were closer to 6.5%. Ten years ago, they were above 8%.
The average home loan rates don’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1% of the loan amount. The average fee for the fixed thirty-year home loan was unchanged. The average cost in lending fees on the fifteen-year fixed mortgage increased from 0.7 to 0.8.
The average mortgage interest rate on the five-year ARM fell to 2.98% from 2.96%, which had been a record low. The average mortgage rate on the one-year adjustable loan increased to 2.95% from 2.88%. According to Freddie Mac, It fell last month to 2.81%, the lowest on records dating to 1984. The average lending fees on the five-year and one-year ARMs were both unchanged at 0.6.
08 Nov 11 Home Affordable Refinance Revived
After a year of talking about the U.S. government stepping in again to help revive the housing sector, the HARP mortgage breathed new life as the Obama Administration rolled out there plane to expand the Home Affordable Refinance Program.
When the HARP mortgage program was initially rolled out, it was very difficult to find a lender who offered this government refinance plan for liens owned by Freddie Mac or Fannie Mae. Most lenders were not willing to take a risk lending to an upside down borrower that had a mortgage greater than their property’s value.
According to Nationwide, the new HARP refinance has been revised with no loan to value restrictions. That means no matter how underwater homeowners are, they have a new opportunity to refinance if they meet the HARP criteria. There are specific program requirements, so make sure you verify with your loan officer the qualification criteria.
Last week, the federal government announced the HARP refinance, implementing changes that would “allow many more struggling borrowers to refinance their mortgages at today’s ultra-low rates, reducing monthly payments for some homeowners and potentially providing a modest boost to the economy.” Read the original article online > HARP Mortgage Helps Homeowners Refinance.
24 May 11 Homeowners Choosing 10, 15 and 20 Year Terms for Mortgage Refinancing
It’s no secret that mortgage rates have fallen to record lows again. As rates have fallen once again to lows for 2011 for home financing and refinancing. Freddie Mac chief economist Frank Nothaft said there has been a shift to shorter terms “a very strong trend.” Freddie Mac published their latest quarterly survey of people who are seeking a home refinance loan revealed that more than 1 in 3 borrowers were replacing their fixed 30-year mortgage with 15 or 20-year home loans because the interest rates were so low.
Conventional and FHA mortgage rates have fallen to the 4.5% range on the 30-year loan terms, but the conforming 10 year fixed has dropped to 3.375%. For some of these unique refinance programs, lenders want to see at least 25% equity in the house. Higher FICO credit score requirements by Fannie Mae and Freddie Mac are another big impediment; both companies reserve their best rates for borrowers with FICO scores of 740 and higher.
The shift to shorter-term loans is part of an even broader trend among consumers emerging from the scary moments of the recession and global financial crisis: de-leveraging, reducing long-term household debt burdens and getting out of adjustable-rate loans. According to Freddie Mac data, cash refinance transactions, where homeowners raise their home loan balance by more than 5%, accounted for only 25% of refinance loans in the latest quarter, compared with 80% and higher just a few years ago when rates were low and guidelines were much more forgiving.
27 Nov 10 2011 Home Loan Limits Announced for Freddie Mac
Today, Freddie Mac announced its maximum conforming home loan limits for 2011. The government funded mortgage giant extended the mortgage loan limits at least the first nine months of 2011. A spokesman for Freddie Mac said the home loan limits will be unchanged from those in effect during 2010 as the result of new calculations from the Federal Housing Finance Agency. HUD made a similar announcement a few weeks ago for FHA loan limits.
The 2011 conforming mortgage loan limits (applicable to non-high cost areas) remain:
► $417,000 for home loans on one-unit properties
► $533,850 for home loans on two-unit properties
► $645,300 for home mortgages on three-unit properties
► $801,950 for home loans on four-unit properties
Maximum home loan limits for the nation’s high cost areas for the first nine months of remain unchanged from last year. The current maximum high cost limit is $729,750 for a 1-unit single family property in the contiguous United States, although actual loan limits for a specific high-cost area may be lower than the maximum permitted loan limit. The 2011 maximum loan limits for high cost areas are in effect for mortgages originated through September 30, 2011, consistent with a Congressional continuing resolution that extends the current maximum limits.
The continuing resolution sets the maximum loan limits for high cost areas for the first nine months of 2011 as the higher of the maximum limits determined under the Economic Stimulus Act of 2008 (ESA) and the Housing and Economic Recovery Act of 2008 (HERA). These limits are updated annually by FHFA. After calculating the 2011 HERA loan limits and comparing them to the ESA limits, FHFA determined the maximum loan limits for high cost areas for the first nine months of 2011 would be the same as the 2010 maximum loan limits for these areas. For more information on the conforming loan limits, visit the Federal Housing Finance Agency website at www.fhfa.gov.
28 Oct 10 California Politicians Accusing Lenders of Mortgage Fraud
California foreclosures and home loan defaults continue to soar. Property values continue to fall even as California mortgage rates have declined to 50-year lows. Meanwhile politicians continue to be surrounded by controversy as Fannie Mae and Freddie Mac mortgage bailout rumors pick up speed. Lenders are tightening refinance guidelines and many banks are extending loan modification programs in an effort to curb foreclosures. Conforming and FHA loan companies have confirmed significant changes in underwriting that raise the credit and income requirements for home refinancing activity.
Mortgage Reform Focus for 2011
- Tougher Credit Standards
- Mortgage Fraud Prevention
- Home Loan Reform Measures
- Increased Mortgage Insurance Premiums
httpv://www.youtube.com/watch?v=a_mi1tH2opA
Rep. Maxine Waters (D-CA) said people were tricked into “liar loans” (also known as stated income loans) that they could not afford. Maxine Waters refused to answer if her husband’s banks offering principal reductions and mortgage relief as she claims many other financial institutions are doing. The California rep. continues to request for loan modification relief locally and a national moratorium on home loans because so many distressed homeowners can no longer afford their mortgage payment. Many Democrats are calling for immediate loan relief as an option for Americans to remain living in their homes. Waters shrugged off the home financing questions and said this interview is not about her husband.
26 Oct 10 Fannie Mae and Freddie Mac Fueling Mortgage Crisis
Wall Street insiders continue to discuss the future mortgage bailouts of Fannie Mae and Freddie Mac. Home foreclosures and mortgage defaults continue to mount, even as FHA mortgage rates have fallen below 4% on fixed rate 30-year terms. Home mortgage refinancing applications are up starkly from the previous quarter, but the mortgage crisis deepens.
Another Bailout for Mortgage Giants Fannie and Freddie?
httpv://www.youtube.com/watch?v=UgG5CU2Iq_0
“It appears as though many loans and other mortgage-related assets have been double and even triple-pledged to various constituencies.” Bank of America court filing, June 2010, a court filing made by Bank of America back in June is adding another twist to the foreclosure document crisis, a problem that could mushroom into more write-downs for the banking industry, and headaches for Fannie Mae, Freddie Mac, and the New York Federal Reserve, which now owns $1.25 trillion in mortgage-backed securities guaranteed by Freddie Mac, Fannie Mae and Ginnie Mae.
Attorneys general in 50 states are now investigating allegations of falsified foreclosure documents, where banks allegedly have not proved they own the underlying mortgage and in turn have the right to seize a home when a borrower defaults. But now the question is not just who owns the property the home loans but whether Wall Street and the mortgage industry pumped out too many mortgage-backed securities built on these loans? Specifically, the question is how many mortgages were overpromised and overpledged — sometimes two, three maybe five times, maybe umpteen times — to back securities? How many fraudulent mortgage-backed securities now sit on Fannie and Freddie’s books? At the New York Fed? Who will be on the hook for those securities?
A New York Fed official tells me that because Fannie and Freddie back its $1.25 trillion mortgage-backed securities portfolio, it won’t face any losses for rotten securities. Fannie and Freddie officials tell me that while they do have that unlimited pipeline into the US Treasury, they are going to turn around and make the banks swallow the losses for the bad securities they built on loans. Wall Street analysts concur. That is called a put-back. But if the banks cannot, then taxpayers will because the US Treasury is backing up the balance sheets at Fannie and Freddie.
14 Sep 10 Conventional Mortgages Rebounding
Mortgage rates crept up slightly last week, but demand continues to be strong for homeowners seeking a refinance loan. According to Colorado mortgage lender, Shawn Downs who founded Downs Financial Inc., “The mortgage industry has certainly seen better days, but at the end of the day conventional lenders are very good at underwriting mortgages to perform and not default.
A recent report by the regulator of Fannie Mae and Freddie Mac shows that mortgage loan securities packaged by Wall Street firms and mortgage lenders have had substantially worse outcomes than securities backed by the two mortgage titans. The report from the Federal Housing Finance Agency looked at the risk characteristics of loans that had been purchased directly by Fannie and Freddie between 2001 and 2008, and compared them to loans that had been sold to investors as “private-label” securities, or those without government backing.
The report reviews $10.6 trillion in home loans, is being issued as policy makers in Washington begin to more carefully consider the future of the firms, which have been heavily criticized for inflating the housing bubble. Nearly 80% of those loans were acquired by Fannie and Freddie, while the rest were financed through private-label securities. While around 30% of all private-label loans have been 90-days delinquent at some time, that rate falls to 10% for all loans backed by Fannie and Freddie. But Fannie and Freddie have been hard-hit by the housing bubble because of their massive exposure to housing, and because they were thinly capitalized. The government took over the firms two years ago as losses mounted, and it has committed $148 billion and counting to keep the companies afloat.
Loans in private-label securities were generally riskier than those backed by Fannie and Freddie. For example, less than half of mortgages financed by private investors had credit scores above 660, compared to 84% of loans financed by Fannie Mae and Freddie Mac. Around 5% of home loans purchased by the companies had credit scores below 620, generally considered subprime, compared to 32% of loans that went into private-label securities.
The data also showed that loans sold to Wall Street firms had less equity and that private underwriters were much more likely than Fannie and Freddie to finance adjustable-rate loans, including those with artificially low “teaser” rates. But the main conclusions of the report—that private-label securities were riskier and performed worse than those bought by Fannie and Freddie offer little comfort today.
Tags: Downs Financial Inc
02 Sep 10 Mortgage Rates Fall for 11th Week in a Row
Freddie Mac announced today that the average 30-year mortgage rates dropped once again to a new record low of 4.32% with an average 0.7 point for the week ending September 2nd. In the previous period, the average was 4.36%, and the year-ago average was 5.08%. “The 12-month price growth of core personal expenditures remained at 1.4% in July, which kept overall inflation expectations well at bay. Federal Reserve chairman, Ben Bernanke reiterated this in his August 27th speech, noting that with inflation expectations reasonably stable and the economy growing, inflation should remain near current readings for some time before rising slowly. Amy Crews Cutts, Feddie Mac deputy chief economist said that as a result, home loan rates fell further this week to new historic lows.” It will be interesting to see if the record low mortgage rate streak can continue.
23 Aug 10 Home Mortgage Rates Fall to Record Lows Again
According to Freddie Mac, mortgage rates dropped this week to more record lows amid concerns about the state of the U.S. economy. Home mortgage rates on 30-year fixed-rate home loans, the most widely used loan, averaged 4.42 % this week, down from last week’s 4.44% and its year-ago level of 5.12 %, according to the survey. Home mortgage refinance loan volumes have risen for three consecutive weeks as the 30-year mortgage rates have fallen to record lows for nine straight weeks. Freddie Mac started the survey in April 1971. Meanwhile, 15-year fixed-rate home loans averaged 3.9%, down from 3.92% last week, the lowest level since Freddie Mac began surveying this loan type in 1991. 15-year mortgage rates have hit record lows for six straight weeks.
Freddie Mac said rates on 5/1 adjustable-rate mortgages, set at a fixed rate for five years and adjustable in each following year, was 3.56%, unchanged from last week, remaining at its lowest level since Freddie Mac began tracking this loan type in 2005.
Last year at this time, 15-year mortgages averaged 4.56 %; the one-year ARM was 4.69%, and the 5/1 ARM was 4.57%. Rock-bottom rates should continue to spur demand for home loan refinancing, putting extra cash into consumers’ hands that they can save, use to pay off existing debt or funnel into the economy through extra spending.
Home loan applications rose 13% in the week ended August 13th, fueled more by homeowners seeking a house refinance than by new buyers looking for loans, according to an index from the Mortgage Bankers Association. Record low interest rates have yet to spur home sales, which are being weighed down by unemployment and the end of a federally sponsored home-buyer tax credit.
14 Aug 10 Has Obama Mortgage Relief Gone Too Far?
The Obama administration funded the Home Affordable Refinance Program, Home Affordable Modification Program, Hope for Homeowners and now the Emergency Homeowner Loan Program. Most of these tax-payer funded mortgage-bailout programs failed miserably. However, the Home Affordable Refinance Program,initiatve did help underwater homeowners with 125% mortgage refinancing , but only a small percentage of homeowners met th Fannie Mae and Freddie Mac loan requirements. Rates on fifteen-year loans dropped to 3.92% this week and the thirty-year rates fell to 4.44%. Nationwide reported that economist have forecasted that approximately 20 million homeowners will have an underwater mortgage at some point in 2011. The Fed announced this week they it would use the proceeds from Fannie Mae and Freddie Mac portfolio of mortgage-backed securities to purchase government debt.
FHA refinancing requirements are getting more difficult for the average borrower as HUD is said to be tinkering with a minimum credit score of 500. Lenders are bracing themselves for tighter FHA guidelines in the coming year as HUD moves to rebuild the reserves for the FHA insurance premiums. Read the original article online > Relief for Refinancing with Short Refinance and Emergency Homeowner Loan Programs
11 Aug 10 Emergency Homeowner Loan Program
Word on the finance street is that the Federal government will soon announce the Emergency Homeowner Loan Program. The latest round mortgage bail-outs from the Obama Administration is said to be focused on aiding homeowners who have under-water mortgages.
According to CNNMoney, the Obama administration pledged another $3 billion in additional funds available to assist distressed homeowners in a foreclosure prevention effort. One part of the mortgage bail-out plan, includes a new $1 billion program that will offer self-employed home loans to unemployed borrowers at risk of losing their homes. The mortgage loan relief, which will be dispersed through non-profit and housing agencies, will carry 0% interest and be good for a maximum of $50,000 for up to two years. In the coming weeks, HUD said it will announce details about the new loan relief program, called the Emergency Homeowner Loan Program.
It was not clear whether or not the Emergency Homeowner Loan Program would be part of the recently discussed bail-out for Freddie Mac and Fannie Mae. HUD announced just last week more government loan relief with the FHA short refinance program that was created to help homeowners refinance their under-water mortgages. It also wasn’t clear whether or not the FHA short refinance program would be part of the Emergency Homeowner Loan Program. HUD was unavailable for comment.
Recent Government Mortgage Relief Programs
|
|
The administration also added $2 billion in home loan aid for its mortgage program that helps struggling homeowners in the states with highest unemployment rates. Today, the Obama administration announced an additional $2 billion that will expand the mortgage relief program to a total of 17 states and the nation’s capital. The regions chosen have suffered significant home value depreciation, high unemployment and high foreclosure rates well above than the national average for a year.
Tags: Emergency Homeowner Loan Program, FHA short refinance program, self-employed home loans, under-water mortgages
22 Jul 10 Hybrid ARM Rates Decline
Mortgage rates on hybrid ARM loans declined again this week according to Freddie Mac. The 5-year ARM home loans averaged 3.79%, down from 3.85% a week earlier. Home mortgage rates on 1-year ARM home loans dipped to an average of 3.70% from 3.74%. The mortgage interest rates do not include loan origination fees known as points. One point origination is equal to 1% of the total loan amount. The national fee for home mortgage loans in Freddie Mac’s survey averaged 0.7 a point for 30-year, 15-year and 1-year loans. The average fee for 5-year ARM home loans was 0.6 of a point.
22 Jul 10 Freddie Mac Reports More Record Low Rates
Freddie Mac published their weekly rate report showing that rates for 30-year mortgages had dropped again to 4.56%. The mortgage icon reported that home loan rates declined to break the previous record set last week. Many first time home buyers will certainly make a move to lock the interest rate on their home loan.
The National Association of Realtors said today that last month’s sales fell 5.1% to a seasonally adjusted annual rate of 5.37 million. As previously reported, the housing market has been stalled since the federal tax credits for first home buyers expired on April 30th. Home refinance applications increased in recent weeks but home purchase loan applications have stalled. With home loan rates this low you have to wonder what kind of incentives consumers need to finance a home. Sales of previously occupied homes fell in June and are expected to keep sinking. The National Association of Realtors said Thursday that last month’s sales fell 5.1% to a seasonally adjusted annual rate of 5.37 million. The housing market stalled after federal tax credits for homebuyers expired at the end of April. Home sales have dropped off, homebuilder confidence has waned and consumer sentiment is in the dumps.
Read the original mortgage news article > Mortgage Rates for First Time Homebuyers
Tags: 30-year home mortgages
06 Jul 10 Mortgage Activity Slowing Despite Record Low Home Loan Rates
2010 has been a roller coaster ride for mortgage professionals because interest rates have been low but consumers are slower to do anything because of our sluggish economy. Record low home mortgage rates have done nothing to stop a renewed housing slide, as new home sales fell to record lows in May and both mortgage refinancing and home buying volumes fell throughout June.
According to Bob Dorsa, president of the American Credit Union Mortgage Association, “There’s a bit of a fear in the marketplace and people don’t want to do anything.” A strong market in the first quarter of the year had buoyed hopes of a housing recovery, but it appears the first-time homebuyer’s tax credit was a primary driver; since its expiration new home sales were down 32.7% in May to an annualized rate of 300,000. That’s the lowest home mortgage rates reported since record keeping for interest rates began in 1963.
The thirty-year fixed rate mortgage dipped to an average of 4.69%. That is the lowest rates recorded since Freddie Mac between tracking mortgage rates in 1971. The previous record of 4.71% was set in December. The 15-year average fell from 4.20% to 4.13%, also a record low. ARM rates have also moved near record territory, with the average for the five-year ARM falling from 3.89% to 3.85% and the average for the one-year ARM dipping from 3.82% to 3.77%.
Mortgage refinance rates have declined even more over the last two months. Home loan rates tend to track the yields on long-term Treasury debt. Refinance loan volumes have also slowed even as interest rates are falling below levels seen during the “mini-boom” of 2009. Unfortunately most homeowners who are failing to produce enough income to keep their loan payments current usually do not have the required income need to qualify for mortgage refinancing.
In Alabama, Anita Domondon, VP with Meriwest Mortgage noted, “With the Home Affordable Refinance Program enables home refinancing to 125% and for many homeowners that is not good enough because their mortgage is so far underwater.” The notion of a housing double-dip is starting to take hold in some circles, including credit unions. And while CUs across the country have gamely offered loan modifications and debt settlement programs, the rock-bottom rates have left many inflexible on mortgages. The original article was written by Matt Blumenfeld.
Tags: ARM rates, lowest home mortgage rates, thirty-year fixed rate mortgage
